Read more: ‘Recession is unavoidable’ but portfolios should stay the course
“I counsel my clients to take the long view, which means holding on perhaps 95% of the time,” he told Wealth Professional. “But I think for advice to be credible, there has to be some balance. There must be some circumstances when you can sell, too.”
While the advice to keep calm and look past market turbulence is usually sound advice, DeGoey maintains that the current market may be an exception. The monetary policy cause and effect is hard to avoid. If market drops continue due to entirely foreseen rate hikes, more prudent courses of action should at least be on the table.
After the Covid lows in March 2020, historically accommodative monetary policy gave the stock market and the larger economy a lot of runway to advance. Accordingly, the markets of 2020 and 2021 were buoyed by central bank accommodation. But in 2022, investors are realizing that the easy gains are in the past. With rates being hiked at every meeting, the expected consequences are predictable. Central bankers are making it plainly clear that they will do what is necessary to bring inflation – which they had previously dismissed as transitory – back under control.
“It’s fine to take a long-term view, but don’t try to sugar-coat things when it’s obviously not going to be an easy go for the next three months, and possibly the next 16 months,” De Goey says.
